ECON 1012- Midterm Exam Guide - Comprehensive Notes for the exam ( 26 pages long!)
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Income approach: measures gdp by summing the incomes that firms pay households for the services of the factors of production they hire wages for labor, interest for capital, rent for land, and profit for entrepreneurship (factor incomes). The sum of factor incomes equals net domestic income at factor cost. 70 divided by the annual percentage growth rate of the variable. The rule of 70 applies to any variable. For example, if a country"s annual real gdp growth rate is 5%, it would take approximately 70/5=14 years for the real gdp of this country to double its level: price indices. Inflation & deflation: to distinguish between the money values and real values of economic variables (student loan, parents" savings, tuition fees etc. ) 1: inflation: a persistently rising price level, deflation: a persistently falling price level, inflation rate/deflation rate: annual percentage change of the price level. Inflation rate (%) =growth rate of price level=
